Over two years after Lake St. Martin First Nation was devastated by flood waters, the mouldy homes sitting on the land are finally coming down.

More than 2,000 evacuees are still in temporary housing off of the reserve. Now, 49 homes are slated to be demolished.

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Flood water devastated Lake St. Martin First Nation in 2011, forcing mass evacuations. (CBC)

Gary Sanderson began demolishing the first home on Tuesday.

He said many of the homes that used to house families are now covered in black mould.

Many of the homes are still surrounded by water and must be pumped before crews can start demolition work.

"You can feel the sadness for everybody in the community, especially driving through," said Sanderson.

"I hope things get better."

Chief Adrian Sinclair said the demolitions are a part of that process and said negotiations to settle new land adjacent to the existing reserve are going well.

"Both governments are talking with us," said Sinclair.

"We just have to come to terms with the land, the houses and the infrastructure."

On Tuesday, the First Nation signed a tentative deal on 640 acres immediately north of the reserve.

Sinclair said a community referendum on the new land will be held as early as next month.

"There will be some members that are going to object to the land, but the evacuees are tired of the city," said Sinclair.

"Basically, it's time to go home."

Sinclair said he is pushing for a September move-in date, but the site still needs to be developed. Provincial officials said that likely means a later move-in date.